Frontline to reduce fleet size to help with debt

Frontline Ltd. to restructure company to deal with massive debts; shares jump

Companies:

RELATED QUOTES

NEW YORK (AP) — Oil tanker owner Frontline Ltd. said Tuesday it will shed some of its fleet to deal with heavy debts and a decline in contract rates.

The Bermuda company, which faces nearly $1 billion in bank debts and other payments related to new tanker orders, will sell those tankers and a portion of its existing fleet to a new company that was established with the help of Frontline Board Chairman John Fredriksen.

The new company, named Frontline 2012, will buy 11 very-large crude carriers and four other tankers from Frontline Ltd. The value of those tankers is appraised at $1.12 billion. Frontline 2012 also will take on Frontline Ltd.'s $666 million in bank debt and another $325.5 million in payments for new tankers.

Frontline 2012 plans to raise $250 million in stock to get the company running. Frontline will buy 10 percent while Hemen Holding Ltd., a company indirectly controlled by Fredriksen through his family trusts, will underwrite the remainder. Hemen Holding will guarantee $505.5 million toward restructuring Frontline. The guarantee is valid until Dec. 31.

The restructuring deal will cut Frontline's fleet by about 20 percent in exchange for taking massive debts off its books.

CEO Jens Martin Jensen said it will allow the company to deal with a sharp drop in contract rates for oil tankers: "Frontline will be extremely well positioned to meet the challenges the current oversupply of tankers has created."

Contract rates for very-large crude carriers have dropped for Frontline from about $96,500 per day in the third quarter of 2008 to $12,000 per day in the same period this year.

--

Get stories like this on the Yahoo app and discover more every day.Download it now.

DON'T MISS

Investing in local manufacturing has helped Daikin Airconditioning India scale up in the country, says Kanwal Jeet Jawa, Managing Director, as he outlines his growth strategy to Dipak Mondal of Business ... …

Several factors are driving this flourishing trade in bad assets. But the biggest trigger came in November 2013 when RBI Governor Raghuram Rajan, in a strongly worded exhortation, asked the banking system ... …

Quotes are real-time for NASDAQ, NYSE, and NYSEAmex when available. See also delay times for other exchanges. Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.